Energy Procurement, Utilities, Commercial, Industrial, Sourcing Renewables  -  July 13, 2016

Switch goes after Nevada regulators, NV Energy for $30M, permission to exit service

Updated July 14 at 10:30 a.m. with statement from NV Energy

One of NV Energy Inc.'s large corporate customers has filed suit against the electric utility and state regulators alleging deceptive trade practices, fraud, civil conspiracy, conspiracy to commit fraud, negligence and gross negligence.

The lawsuit from Las Vegas-based data center company Switch comes as two of NV Energy's other large corporate customers — MGM Resorts International and Wynn Resorts — are pushing forward with their plans to pay millions of dollars in order to stop buying its power. Those two customers, plus one other, had been granted permission by the Public Utilities Commission of Nevada earlier this year to leave NV Energy's electric service, under the condition of the fee, and purchase power from other providers. 

Switch had in 2014 essentially asked the PUC for that same permission, though the regulators rejected Switch's request in 2015. Now, the Las Vegas Sun reported July 12, Switch is suing NV Energy and the commission, claiming that the regulators were unconstitutional in denying its request to leave the utility and purchase its power on the open market.

NV Energy is a subsidiary of Warren Buffett's Berkshire Hathaway Inc.

Through the suit, Switch is asking for at least $30 million in damages and the permission it sought in the first place to stop buying its power from NV Energy and instead go through the open market, the newspaper reported. Switch reportedly says in its complaint, filed in U.S. District, Court, that the PUC decision violated its 14th Amendment rights; Switch also points to the PUC's later decision to allow MGM, Wynn and another major casino operator to stop buying power from NV Energy and instead go to alternative providers.

The newspaper explains that in its original request to leave NV Energy, which the PUC denied, Switch sought to instead execute contracts with renewable energy developer First Solar for wholesale renewable energy. The Sun wrote: 

Switch ultimately negotiated a settlement with NV Energy, whereby the utility would receive the contracts with First Solar and Switch would pay a premium to NV Energy so that it could fulfill a corporate pledge to source its power from entirely renewable resources, the lawsuit alleges. Switch is saying now that the agreement, which required the data company to pay NV Energy more for the renewable power, resulted from an improper proceeding and in the unjust enrichment of NV Energy.

Switch claims it has "suffered monetary damages in excess of $30 million," has been required to pay NV Energy increased costs for renewable energy, "and has been deprived of its statutory and constitutional rights, including Switch’s rights to access interstate commerce,” the Sun reported. 

The data center company's lawsuit also claims impropriety on the part of former PUC general counsel Carolyn Tanner; the newspaper reported that Switch claims Tanner influenced the utility regulators by engaging in improper communications outside the scope of the proceedings to the benefit of NV Energy.

The Las Vegas Sun reported late July 13  that NV Energy plans to defend itself against Switch's claim against the utility and its employees, calling the allegations "baseless." 

“Switch is a very important customer to NV Energy, and given how far we thought we had come over the past two and a half years of working with their team on a variety of issues and opportunities, we are surprised and disappointed with this turn of events,” the newspaper quoted NV Energy spokeswoman Jennifer Schuricht as saying. 

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